Lufthansa (ETR:LHA) has revealed the measures it will take to turn around its Eurowings on Monday, aiming for it to generate profit as quickly as possible.
Shares in Deutsche Lufthansa AG were trading almost 2% lower on Monday.
Recently, the German airline posted a deeper loss for its first-quarter of the year, blaming higher fuel costs. It revealed a loss that was almost nine-times deeper than that of the first-quarter a year earlier.
On Monday, Lufthansa announced that it has changed its current dividend policy, saying that in future, 20-40% of its net income should be regularly distributed to shareholders.
Its medium term aim is to raise its free cash flow to at least €1 billion per year.
The German low-cost airline Eurowings, in future, will focus on short-haul flights. The Eurowings fleet will be standardised on the Airbus A320 family, and a 15% reduction in unit costs will be sought by 2022.
“With the airlines in our Group we are excellently positioned in our home markets, which are among the strongest in the world,” says Carsten Spohr, Chairman of the Executive Board & CEO of Deutsche Lufthansa AG.
“Our Group’s service companies are also world leaders in their fields. We want to translate this market strength even more consistently into sustainable profitability and value creation. And it is to this end that we are presenting concrete actions today which will enhance our efficiency and generate value for our shareholders,” Carsten Spohr continued.
Lufthansa also said that a turnaround plan can be expected for Brussels Airlines, another of its subsidiaries, in the third quarter of 2019.
Brussels Airlines, which recently made the news for a flight facing operational difficulties, will not be integrated into Eurowings, the company added.
Elsewhere in aviation, Ryanair (LON:RYA) grew its passenger volume by 13% in May, whilst Wizz Air’s (LON:WIZZ) passenger numbers rose 22.4%.
Shares in Deutsche Lufthansa AG (ETR:LHA) were trading at -1.38% as of 11:50 CEST Monday.